IBRACO: Robust Performance Drives Positive Outlook, Analysts Recommend Buy
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
The company has delivered a robust set of 9MFY25 results, with net profit surging to RM57.3 million, significantly surpassing the full-year earnings of RM48.8 million recorded in FY24. Excluding a one-off RM19 million land compensation gain, core net profit still demonstrated strong growth, climbing 43% year-on-year to RM38.3 million. This impressive performance was primarily driven by higher contributions from both its property development and construction divisions, alongside accelerating construction progress across key infrastructure projects. Management has expressed confidence that this strong earnings momentum will continue into 4QFY25, positioning FY25 to be a record year, and potentially leading to a higher dividend payout.
Performance Review
The exceptional 9MFY25 performance reflects strong operational execution. The property development division saw new sales more than double to RM289 million (from RM133 million in 9MFY24), largely fueled by robust demand for strata-titled shops at NorthBank Kuching, which are over 90% sold. The recent launch of the PrimeBay Industrial Park in August 2025 has also seen a 30% take-up rate, expected to further boost 4QFY25 sales. With 9MFY25 sales already accounting for 83% of the management’s full-year target of RM350 million, confidence remains high in achieving this goal. Furthermore, unbilled sales of RM360 million as of end-September 2025 provide solid earnings visibility well into FY26.
Future Outlook and Order Book
The construction division continues to benefit from a healthy outstanding order book of RM794 million, providing earnings visibility through FY27. This is underpinned by active progress on key projects such as the Autonomous Rapid Transit (ART) and the Second Trunk Road. The company maintains an active tender book of approximately RM900 million, primarily in infrastructure projects, excluding larger initiatives like the Kuching Urban Transportation System Green Line. Management has also received a letter of intent for a substantial government quarters project, currently under design and with formal award anticipated in early FY26.
The NorthBank township’s appeal is set to strengthen further with ongoing infrastructure works, including the ART station, and the upcoming Regency Hospital Kuching, a 300-bed private specialist hospital. These developments are expected to enhance accessibility and establish NorthBank as a key medical and lifestyle hub, bolstering its long-term value.
Despite the strong current performance, the investment bank has revised its FY25/FY26/FY27 earnings forecasts slightly downwards. This adjustment incorporates more conservative property sales assumptions and a revised construction order book replenishment schedule, alongside slightly lower construction margins due to slower replenishment timing and a higher proportion of infrastructure jobs. For FY26, management has guided for a flattish sales target, anticipating slower take-up for certain commercial and serviced apartment projects.
Investment View
Factoring in the revised earnings and the company’s solid operational foundation, TA SECURITIES has issued a BUY recommendation. The target price has been set at RM0.25, indicating a potential upside of 25.0% from the last traded price of RM0.20. While FY25 is projected to be a record year, the investment bank believes that further re-rating will be contingent on securing fresh contract wins or achieving stronger-than-expected property sales momentum. The current valuation suggests fair levels, but the robust pipeline and strong execution capabilities provide a compelling investment case for future growth.
